Transfer of Property Act

TRANSFER OF PROPERTY ACT AFTERSCHO☺OL

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TRANSFER OF PROPERTY ACT 1882 Dr. T.K. Jain.

AFTERSCHO☺OL Centre for social entrepreneurship Bikaner M: 9414430763 [email protected] www.afterschool.tk, www.afterschoool.tk www.afterschoool.tk 02/03/09 www.afterschoool.tk

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COVERAGE … • • • • • • •

IMMOVABLE PROPERTY ONLY SALE (54 – 57) MORTGAGE (58 – 104) LEASE (105 – 117) EXCHANGE (118- 121) GIFTS ( 122 – 129) ACTIONABLE CLAIM (130 - 137)

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VESTED V/S CONTINGENT INTEREST … • A vested interest takes place on the date of transfer – contingent on the happening of some event • Vested : It is firm and final • Contingent : it is incomplete – as it depends on happening or non-happening of some event.

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Immovable property … • • • • •

Not defined… Does not include the following : 1. standing timber 2. growing crop 3. grass Immovable property includes lands and benefits arising out of land or things attached to land. 02/03/09 www.afterschoool.tk

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Attached to land? • Means : rooted in land, embedded in land or attached to something which is attached to land.

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Examples of immovable property… • • • • • • • • •

Rent Right to way Right to ferry Right to fishery Right to receive future rent Factory Hereditary offices Equity of redemption Interest of mortgage

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• Right to collect dues from a fair or a piece of land

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These are not immovable property… • Royalty • Copyright • Decree for sale of mortgage deed • Right to worship • Government promissory note • Right to recover maintenance allowances 02/03/09 www.afterschoool.tk

• • • •

Growing timber Grass Growing crops Machinary – which is not permanently attached to earth.

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Who can transfer the property? • Sec. 7 : • 1. competent to contract • 2. authorised to dispose off the property (owner or any person so authorised to sell the property).

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How to transfer : If the value of property is above 100, then only by registered instrument. If the property is tangible property, and of less than Rs. 100, by delivery only. If the property is intangible – only by registered instrument. Reversions : only by registered instrument. 02/03/09 www.afterschoool.tk

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Attestation .. • At least 2 persons as witness • Each must see the executants sign and sign a mark to that effect. • It is not necessary that both are present at the same time – they may be at different times also. • Antmus attestandi : the attestants must put the signature with an intention to attest. 02/03/09 www.afterschoool.tk

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Registration .. • It is an essential legal formality .

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DOCTRINE OF ELECTION .. • If through one instrument, you have two transactions – then you have to accept both the transactions or none. You cant accept one and reject other. • Example: Goti sells his garden and bunglow to Kapsa by one instrument. Kapsa only wants to retain bunglow and wants to cancel the transfer regarding garden, this is not possible. • If Kapsa takes bunglow, it means, he has confirmed the transaction and has to take garden also. 02/03/09 www.afterschoool.tk

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Doctrine of feeding the grant by estoppel • It is the case of fraudulent transfer. • The transferor doesn’t not have ownership, yet he transfer for consideration. • Later on the transferor gets the ownership and the transferee has not yet rescinded the contract. • The transferor is bound to give the property to the transferee. 02/03/09 www.afterschoool.tk

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Doctrine of fraudulent transfer.. • This transfer it carried out to avoid recovery by creditors / to cheat the creditors. • This will be fraudulent transfer and void. • However, if by transfer, you are giving preference to one creditors among many creditors, then this is not a fraudulent transfer. • However, rights of a bonafide transferee (who has obtained property in good faith and for consideration) are protected by sec. 53(2) 02/03/09 www.afterschoool.tk

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Example: • Khoti with the intention of cheating his creditors sells his entire property to Goti, one of his creditors. Can he do so? • Yes – it is valid. • What is the option with other creditors? • They may go to the court in 3 months and get Khoti declared insolvent and in that case this transfer will be cancelled and the property will be distributed among all the creditors proportionately 02/03/09 www.afterschoool.tk

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Properties that cant be transferred? • • • • • • • •

Right to easement Right to sue Public office Right to reenty on breach of a condition Right of an heir apparent Stipends Right to future maintenance Actionable claims

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Doctrine of lis pendens • Lis = dispute • Pendens = pending • During the pendency of a suit or inquiry, or a litigation, a property cannot be transferred. • The suit must be related to such property. • Sec. 52 02/03/09 www.afterschoool.tk

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Exchange .. • Two persons undertake mutual transfer (one property for another). • There is no money being exchanged • Sec. 118 to 121

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GIFT • There must be voluntary transfer of ownership without any consideration • The subject matter must be certain • Only through registered instrument • It must be accepted by the donee • It cannot be revoked • You cant gift one existing + one future gift by one instrument (it will be void). • This law doesn’t apply to mohammedans (as muslim law is applicable on them). 02/03/09 www.afterschoool.tk

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Example.. • Goti gifts his bunglow to Tarachand. But tarachand doesn’t know about it. Can Goti cancel the gift? • Yes – but only till the time Tarachand knows about it and accepts it. Once Taracchand has accepted the gift, it cannot be revoked. Ans.

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Onerous gift . • Here gift is combining some obligation also. The donee is at a liberty to accept it or not.

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Actionable claim • • • • •

Claim to any debt etc. Example: Arrears of rent PF Money due in insurance policy

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Lease … • Transfer of right to enjoy a property • It is for a fixed time • Transfer must be accepted by the transferee • It is made for consideration / rent

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Duties of lessor • Disclose all material defects • Put the lessee in possession of the property • Allow quiet enjoyment of the property

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Duties of lessee • Disclose all interests that lessee has in the property • Return to the lessor the possession of the property • Pay on time • Safeguard the property • Remove all fixtures created on the property 02/03/09 www.afterschoool.tk

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MORTGAGE • To transfer a property for sometime (for securing loan). It is similar (but not the same) as charge

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Usufractuary mortgage • Sec 58(d) where the mortgagor (the person who gives property) delivers possession to the mortgagee (the banker or the person who takes the property) and authorises him to retain possession until payment of the mortgage money and to receive the rents / profits. (but there is no right to sell the property) 02/03/09 www.afterschoool.tk

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English mortgage • Here the mortgagor transfer the property to the mortgagee and upon completion of the time gets the property back in his own name. • (for example, A sells his property to B and on due date makes the payment and collects the property back from C and so there are two sale transactions). 02/03/09 www.afterschoool.tk

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Not-actionable claims.. • Copyright • Debentures • Beneficial interest in immovable proeperty

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Essentials of mortgage… • Mortgage is tranfer of interest in order to secure payment of loan. Suppose Goti wants to take a loan, he mortgages his property to the bank. The bank can foreclose the property if Goti doesn’t make the payment of loan. • Mortgage is about immovable property. (hypothecation is about movable property). 02/03/09 www.afterschoool.tk

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Types of mortgage.. • • • • • •

Simple mortgage Mortgage by conditional sale Usufractuary mortgage English mortgage Equitable mortgage Anomalous mortgage

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English mortgage … • Where the mortgagor completely transfers the property to mortgagee with the condition that mortgagee will again transfer the property if mortgagor makes the payment. • The property is absolutely transferred.

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Equitable mortgage … • Here the person delivers documents of immovable property to the mortgagor (these deeds act as security).

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Anomalous mortgage • It is a combination of various types of mortgage (anomalous means a types of mixtures, which cannot be identified as one pure type). • Suppose, you give the property, also give the right to sell the property, and the mortgagor also takes personal liability, in this case, it is not usufractuary mortgage – but anomalous mortgage. 02/03/09 www.afterschoool.tk

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Puisne Mortgage … • Where the mortgagor secures the property to second person also besides the first mortgage, it is called puisne mortgage.

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Rights of mortgagor .. • Right to redeem – or the right to take back the property – once the loan has been paid • Right against clog on equity on redemption – clog means any clause which restricts the mortgagor from receiving the property back from the mortgagee.. • Right of partial mortgage ( when there are two ore more mortgages, the mortgagor can redeeem them in parts – as he makes the payment). (sec. 61) 02/03/09 www.afterschoool.tk

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Marshalling .. • If the owner of 2 or more properties mortgages them to one person and then mortgages one or more properties to another person, then the second person can ensure that first the properties not mortgaged to him are used for satisfying the debt. E.g. : Jitu mortgages his Flat and Bunglow to Bank and mortgages Flat to Goti. Now Goti can ensure that the bank uses his Bunglow for securing the payment – and then the flat. 02/03/09 www.afterschoool.tk

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subrogation • Besides mortgagor the following are also entitled to sue for redemption of the property: • Any person who has interest in the property • Creditor • Surety for the payment of the mortgage debt • (read sec. 91 and 92 for details). 02/03/09 www.afterschoool.tk

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Difference between charge and mortgage… • Mortgage may be registered – but the charge need not be registered – • Charge may be created by act of law – but the mortgage is created only by the parties • Mortgage is transfer of interest – but charge is not transfer of interest

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Floating charge .. • Fixed charge is on a specific property - but a floating charge is on the assets for the time being – these assets may change.. • It is a charge on property in the ordinary course of business (and the property may change ). • eg Jitu got a factory as a gift from his in laws, with the condition that he will meet the expenses of his father in law. Now the property may change, but Jitu has to pay – because there is charge. 02/03/09 www.afterschoool.tk

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About AFTERSCHO☺OL • PGPSE - World’s most comprehensive programme on social entrepreneurship – after class 12th • Flexible – fast changing to meet the requirements • Admission open throughout the year • Complete support from beginning to the end – from idea generation to making the project viable. 02/03/09 www.afterschoool.tk

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Branches of AFTERSCHO☺OL • PGPSE programme is open all over the world as free online programme. • Those who complete PSPSE have the freedom to start branches of AFTERSCHO☺OL • A few branches have already started one such branch is at KOTA (Rajasthan).

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Workshop on social entrepreneurship • We conduct workshop on social entrepreneurship – all over India and out of India also - in school, college, club, association or any such place - just send us a call and we will come to conduct the workshop on social entrepreeurship. • These workshops are great moments of learning, sharing, and commitments. 02/03/09 www.afterschoool.tk

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FREE ONLINE PROGRAMME • AFTERSCHO☺OL is absolutely free programme available online – any person can join it. The programme has four components : • 1. case studies – writing and analysing – using latest tools of management • 2. articles / reports writing & presentation of them in conferences / seminars • 3. Study material / books / ebooks / audio / audio visual material to support the study • 4. business plan preparation and presentations of those plans in conferences / seminars 02/03/09 www.afterschoool.tk

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100% placement / entrepreneurship • AFTERSCHO☺OL has the record of 100% placement / entrepreneurship till date • Be assured of a bright career – if you join AFTERSCHO☺OL

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Pursue professional courses along with PGPSE • AFTERSCHO☺OL permits you to pursue distance education based professional / vocational courses and gives you support for that also. Many students are doing CA / CS/ ICWA / CMA / FRM / CFP / CFA and other courses along with PGPSE. • Come and join AFTERSCHO☺OL

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